Investors looking to build a stream of passive income would most likely have Woolworths Group Ltd (ASX: WOW) shares on their radar.
The supermarket giant is an inherently defensive stock. That's because, even if confidence and customer sentiment fall, inflation keeps rising, and purse strings tighten, Australians still need to buy groceries.
The main benefit of Woolworths is its sheer scale. Its size gives the company strong buying power, an extensive supply chain, and the ability to invest in efficiency over time.
Due to its defensive nature, Woolworths can generate a relatively stable cash flow regardless of economic conditions. This means it can continue paying its shareholders attractive passive income.
But what if you wanted to generate $1,000 of passive income from Woolworths shares every single year? What exactly would that entail?
Let's investigate.
Image source: Getty Images
What passive income does Woolworths pay its shareholders?
First, we need to understand what dividends the supermarket giant pays its shareholders.
Woolworths typically pays its investors twice-yearly dividends: an interim dividend in April and a final dividend in October.
The company most recently paid its shareholders an interim dividend of 45 cents per security, fully franked, in April.
CommSec's consensus estimates suggest Woolworths could pay a total dividend per share of 99.5 cents in FY26.
The supermarket giant is then forecast to pay shareholders $1.13 in FY27.
At the time of writing, this translates to a forward dividend yield of around 2.5% for FY26. For FY27, the yield could be closer to 2.8%.
So how many Woolworths shares do I need to generate $1,000 in passive income in FY27?
Assuming the company pays the expected dividend of 99.5 cents per share in FY26, investors would need to own approximately 1,005 shares.
Then, assuming the supermarket business pays the forecasted $1.13 dividend in FY27, investors would need to buy 885 shares in order to generate a $1,000 annual passive income.
How much would that cost?
At the time of writing, Woolworth shares are trading at $40.08 a piece.
That means, in order to buy the 885 shares needed for $1,000 of passive income each year, you would need to invest roughly $35,470.
It's certainly not a small sum, but it could be worth it in the long run.
And remember, you don't need to invest the entire amount in one go. Start off small and let compound growth do some of the work for you.
